Windows Authentication prompt appears if you access via domain name

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I have a web application hosted in IIS and configured with Windows Authentication. It is supposed to be SSO (Single sign-on) and work without prompting users for their credentials. It works in this way if I access it via server name or cname. Example:

https://serverName/applicationName
https://cname/applicationName

However, it asks for user credentials if I access the application via full domain name such as:

https://serverName.domain.com/applicationName
https://cname.domain.com/applicationName

Any ideas what the issue would be?

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